Best Unsecured Business Loans for 2018
Most traditional lenders, and even many alternative lenders, require collateral or a blanket lien on business assets from small business owners applying for a loan. However, if you’re looking to get an unsecured small business loan, we’ve reviewed over 30 different lenders and loans and rounded up some of the best options currently available to business owners.
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Best Unsecured Business Loans for Bad Credit
Even if you have a less than perfect credit score, it’s still possible to get an unsecured business loan. We rounded up some of the best options for borrowers with poor or limited credit history.
If you have a low credit score, Credibly is one of the better options as you can borrow up to $250,000, which is more than what other lenders in this section offer. The company also doesn’t require personal guarantees or a minimum credit score for either of its loans. Credibly offers a working capital loan for short-term needs and a business expansion loan for long-term investments, with typical APRs around 10% to 36%. While Credibly doesn’t require a minimum credit score, your business needs to be at least six months old with $10,000 in monthly revenue and bank account deposits. For the business expansion loan, you’ll also need an average daily bank account balance over $1,000. Credibly can get you funds in as quickly as two days after loan approval.
Through QuarterSpot, you can borrow up to $150,000 without collateral or personal guarantee requirements, making it one of the better options for those with below average credit. You can also take out a loan from QuarterSpot while you have an existing loan. The company doesn’t require you to pay off an outstanding loan before applying and will even buy out an existing loan. If QuarterSpot buys out your existing loan, they only require you to net 20% of the loan proceeds (many lenders require 50%). APRs are higher at 20% to 48%, but you only need a minimum credit score of 550 to qualify. Your business will also need to be at least 1 year old with $100,000 in annual revenue, an average daily business bank account balance of $2,000 and 10 sales per month. You can receive funding in as little as one to two days.
If you process the majority of your sales through PayPal, a PayPal Working Capital loan may be the best solution for an unsecured loan. PayPal lets you borrow up to 18% of your annual sales, up to a maximum of $97,000, and there are no collateral requirements. There are also no credit score minimums to qualify. Instead, you must have a business or premier account for at least three months and have at least $15,000 to $20,000 in annual PayPal revenue. Because PayPal deposits funds directly to your PayPal account, you can receive funds within several minutes after being approved, making it a good choice if you need funds immediately. Repayment is also automatic and hassle-free, as payments are made as a fixed percentage of your daily PayPal sales.
Best Unsecured Business Loans for Good Credit
If you have a good to excellent credit score, you have a lot of options for getting an unsecured loan. Many traditional banks and credit unions are now offering unsecured loans to qualified borrowers, and alternative lenders are always a choice for no collateral loans.
Some national and regional banks are beginning to offer unsecured loans for qualified borrowers. For example, Wells Fargo offers great fixed rate unsecured loans for its existing business customers. You’re eligible to apply if you have had a Wells Fargo business checking account for at least one year with $50,000 in annual deposits. The bank offers two unsecured loan products: FastFlex loans up to $35,000 and BusinessLoan loans up to $100,000. Interest rates start at 13.99% for FastFlex and 6.25% for BusinessLoan, and you can apply online for either loan.
PNC also offers unsecured loans up to $100,000 with fixed interest rates. However, you’ll have to complete the application process in-person or by phone. Similar to the Wells Fargo loans, you’ll need a PNC business checking account to make repayment on the loan. Both Wells Fargo and PNC can provide funds within several days, but they will typically want to see borrowers with good to excellent credit scores and financially healthy businesses.
LendingClub is another good option if you have a strong credit score. Most people know the lender for personal loans, but the company also offers business loans and lines of credit. At LendingClub, you won’t be required to put up collateral for loans under $100,000, and the lender has better terms than many other alternative lenders, with maturities up to 5 years and APRs starting at 7%. To qualify, you’ll need to be in business for at least 2 years with $75,000 in annual revenue. You’ll also need to own at least 20% of the business, and LendingClub prefers if you have a credit score of 620 or above. Personal guarantees are required for all loans. Once approved for a loan, you will receive funds within two to 14 days.
Best Unsecured Startup Business Loans
Getting an unsecured loan for a startup or new business can be difficult. Lenders view loans made to startups as risky, so they typically require some form of collateral and personal guarantee to mitigate that risk. However, there are some workaround options for getting unsecured funds.
Small Business Credit Cards
If you have a good to excellent credit score, a small business credit card is a fantastic option for unsecured startup funds. The best small business credit cards offer signup bonuses and the ability to earn points, miles or cash back on purchases, and many don’t have annual fees. Another benefit to using a credit card is that you won’t pay interest as long as you pay your balance in full every month. You can also qualify for larger credit limits up to $100,000 if your credit history is strong. Qualifying for a business credit card is primarily based on your creditworthiness, not the age or health of your business. Chase, American Express and Capital One all offer excellent business credit cards.
- 13% - 20% APRs
- Ability to earn cash back, miles or points (1% - 5% rewards rate)
- Must have good to excellent credit score
- Signup bonuses and perks
- Credit limits up to $100,000 or more
Unsecured Personal Loans
An unsecured personal loan is another good option for new and aspiring entrepreneurs. Depending on which lender you choose, you may be able to borrow up to $100,000 with competitive APRs from 3% to 10%. Even if you don’t have a great credit score, you may still be able to get an unsecured personal loan, though the loan amounts will be lower (up to $35,000) and the APRs higher (up to 40%). Personal loans generally come with flexible terms, allowing you to repay the loan over a few months to several years. Many lenders can also provide funds within a few days, making them a good choice for entrepreneurs in a pinch.
- 3% - 40% APRs
- Terms up to 7 years
- Eligibility based on credit score
- Loans up to $100,000
- Funds in a few days
Kiva is another excellent solution for entrepreneurs looking for unsecured startup funds. Though you can only borrow up to $10,000, the loans are interest-free and there are no collateral or credit score requirements. Because Kiva is a peer-to-peer lender, you’ll need to pitch your business to get investors to lend to you, and the loan amount is determined by the stage of your business (idea, operational, etc.). You’ll also be required to loan $25 to another business as part of your loan package. Average funding times are high at six weeks, but Kiva is a fantastic choice for those with lower credit scores who don’t want to pay high APRs.
- 0% interest
- Terms up to 3 years
- Lenient eligibility requirements
- Loans up to $10,000
- Funds in 6 weeks
Summary of Best Unsecured Small Business Loans
In the table below, we’ve summarized the best lenders and loans for small business owners looking to get an unsecured loan or line of credit.
|Borrowers with low credit scores|
|Borrowers with strong credit|
|Unsecured startup funds|